PASSION & PROFIT

A New Way of Doing Business: Designer-Coach Says Challenges in the Interior Design Industry are Not Insurmountable

All the signs indicate that the interior design industry is experiencing a sustained, if gradual, recovery. Although the trend line is still somewhat jagged, business for interior designers has been improving over the past year and a half. Some designers, in fact, are doing quite well, and hiring at interior design firms is up. Many designers, however, are still struggling, as we discovered from the results of this year’s Interior Design Fee & Salary Survey. The challenges they are facing are, for the most part, not insurmountable, but they require persistence and a willingness to adapt to new ways of doing business.

Finding more affluent, qualified prospects and converting those prospects to paying clients were the biggest challenges we found, cited by two-thirds of the survey respondents. Yet most of these designers—85%—still rely almost entirely on referrals to obtain new business. Eight in 10 say they spend no time on marketing or fewer than four hours per week, and about one in four have no marketing budget, while another third budget less than 5% for marketing. Clearly, these designers need to develop a more robust marketing effort and not rely solely on word-of-mouth to bring them their next client.

More than half the designers in our survey indicated that they had a pressing need to address the problem that clients or prospective clients have trouble understanding the value of their services. And most also said that clients are more demanding than ever and are taking longer to make decisions.

Even though the economy and housing market are improving, consumers have gotten used to spending less and expecting more. Consumers have access to a wealth of free design advice and project photos through the internet and smart device apps. As a result, clients often want to be involved in the design of a project and/or product selection — all of which is making it harder for designers to sell their services and justify their fees.

No wonder, then, that half of designers we surveyed said they feel overwhelmed and underpaid for the amount of time that they work. About one in four are working over 50 hours a week or more, and yet revenues and project billings for many of them are quite modest. Nearly three-fourths reported an average total dollar sale per project of less than $25,000 for the past 12 months. Two out of three earned $40,000 or less last year.

Finding more affluent, qualified prospects and converting those prospects to paying clients were the biggest challenges we found, cited by two-thirds of the survey respondents. Yet most of these designers—85%—still rely almost entirely on referrals to obtain new business.

Poor productivity may be one of the reasons. Three-fourths of firm owners say only about half their time or less is spent on billable activities, and nearly half say the same is true for their team members. In short, these designers are working a lot of hours for which they are not being compensated.

It is clear that the challenges presented by the “new normal” are pressuring designers to rethink how they do business. When we asked them what steps they felt they needed to take within the next two to three months to improve their business this year, two-thirds of them said they needed to develop a business plan or strategic plan, a marketing plan, and to identify better sources for leads. Nine in 10 of these designers own their firms, and the majority has been practicing design for more than 15 years. Nonetheless, they currently lack the basic tools they need to set growth and revenue targets to help them prosper.

After years of consulting with and advising interior designers about their businesses, it still surprises me how many neglect the management and marketing sides of their firms. The results of our survey reveal that many of these designers could be improving the amount of business they have and the revenues they can gain from that business by applying basic, tried-and-true business practices. They are likely losing out on business from competitors or other service providers by not doing so. The survey findings also show that those designers who do make the effort see the results. They are the ones who are going to reap the rewards as demand increases.

Gail is one of Designers Today's most prominent contributors - focusing specifically on the business side of interior design.